Full costs and income of a $1m independent feature film

Grab a cup of tea – this is a long one. It’s rare for filmmakers to get a candid look at the books of someone else’s film but, thanks to the generosity of Marcus Markou, that’s exactly what you’ll get to read below.

Papadopoulos & Sons is an independent feature film that tells the tale of an Anglo-Greek self-made millionaire who loses everything in the banking crisis and is forced to turn to his estranged brother to re-open the fish and chip shop they shared in their youth. It’s a fun family film starring Stephen Dillane, George Corraface and Georgia Groome.

The film was written and directed by first-time filmmaker Marcus Markou and was released in UK cinemas in April 2013.

Before we delve into the journey of the film, we need to take a moment to learn more about Marcus and his motives. Marcus is a successful entrepreneur, so much so that he was able to pay for the film’s £825,000 budget from his own bank account.

He wanted to learn how films are made, make something for his kids to see and have a fun time in the process. He’d taken a short course at the Met Film School but other than that, this was his first foray into the commercial film world.

The budget

The independent feature film took 24 days to shoot in and around London. The largest costs were art department (they had to build a chip shop in an empty shop!), cast and production staff. The Above The Line costs came to £91,821 (11% of the budget), production was £584,800 (71%), post-production £109,436 (13%) with other costs coming to £39,165 (5%).

Getting an independent feature film distributed

Marcus made the film without any industry support and without any distribution deals in place. This meant that once it was complete he had to figure out how he was going to get it to the public and recoup his investment.

At one point, he was close to signing a deal with YouTube to premiere the film online via a ‘pay what you want’ recoupment model. The idea seemed to be well-received at google but in the end the deal stalled when YouTube insisted that Google Wallet was used to collect the donations, despite the fact it was only active in 8 countries at the time.

Marcus turned to self-distribution in the UK and collaborating with a producer’s rep for the international rights. He signed up with producer reps 7&7 who would take 20% of any deal they negotiated but they wouldn’t ever control the distribution of the film, as a traditional sales agent would. Marcus was on the hook for the sales costs (such as attending Cannes and other film markets) but this would be recouped first from income.

Soon after taking the film to the Cannes Marche du Film (the film market where the rights to films are bought and sold), 7&7 secured distribution deals for Greece, Germany and an airline distribution deal.

The film festival circuit

Many independent feature films rely on the festival circuit to get noticed, however Papadopoulos & Sons wasn’t shortlisted at a major film festival. Marcus puts this down to the film not being “an edgy, film festival kind of film”.

Reflecting on his festival experience Marcus said “The film isn’t arthouse; it is too commercial. But it isn’t a big studio film with celebrities in it, so it is arthouse. It is stuck between those worlds, commercial arthouse. In the UK, those worlds don’t really mix.”.

One of the more surreal screenings was in the European Parliament. A member of the film’s cast knew the programmer of cultural events and told him it was a film about the Greek banking crisis (it’s not). The resulting screening took place at the same moment that the Greek Prime Minister was on the floor negotiating Greece’s bailout deal.

Securing a UK cinema release

By this point, the film had a German, Greek and airline deal but was still lacking a UK distributor. Marcus is not someone who gives up easily, and so he turned to self-distribution. Via Miracle Communications, Marcus struck a deal with Cineworld cinemas which placed the film in 13 screens for a week.

Marcus identified Greek communities throughout the UK by looking for Greek Orthodox churches. If there was a church, he’d target the local community, using a variety of off- and on-line media.

Note: These figures are approximations from Marcus, whereas most of the other numbers in the article are correct to the pound as they come directly from his accounts.

How the film performed in UK cinemas

Early on in the three month campaign for the UK release, Marcus had been told that he should aim to achieve “500 per cinema” in the opening weekend. He took this to mean 500 admissions per cinema and set his sights on reaching this goal. He later learned that in fact the target was just £500 per cinema, which is under a sixth of what he was working towards.

In the opening week, across the 13 sites, the film sold 8,000 tickets and grossed £60,659. This means the site average was £2,870, the second highest of the week, beating fellow opening film Dark Skies (site average: £2,680) and GI Joe: Retaliation (site avenge: £2,421) which was on its second week of release.

The high per screen average spurred Cineworld to widen the release meaning that in the second week the film was screening on 16 screens. The vast majority of Marcus’ marketing efforts had been focused on driving people to see it during the all-important opening weekend. This can be seen in the box office figures, where, despite being available on 23% more screens, the film grossed just 31% of its opening weekend (£18,504).

After seven weeks on general release, the film finished its official UK theatrical run. It had grossed £95,509, according to Rentrak, although Marcus points out “I don’t think this includes indie screenings I’ve done because a lot of them come direct to me”. The overall per screen average of its seven weeks was a very respectable £2,274.

Dividing up the UK theatrical box office income

So, what happens to the money gathered by UK cinemas; i.e. the UK box office gross? Using Rentrak’s figures…

£96,000 gross

Minus tax (VAT at 20%) leaves £76,800

Minus Cineworld’s cut (at 65%) leaves £26,880

According to Marcus’ accounts, he received a total of £45,601 from the UK release, which suggests that he was right to point out that the true box office figure was higher (£162,850 by my calculations).

Normally at this point a distributor and sales agent would take a fee and also take back their marketing costs (see here and here for more details) but as Marcus was self-distributing, he saved himself these costs. It’s reasonable to assume that had he taken the traditional releasing model then he would be left with far less, if anything. (Although it’s technically possible that a large distributor would have been able to secure more screens and therefore a higher box office gross).

After we remove the approximately £35,000 he spent on the digital prints and advertising (known as P&A) he is left with £10,600 profit for his six month’s work.

UK TV deal

For the last few years, television has been the largest driver of income for British films and that’s certainly the case for Papadopoulos & Sons. The UK cinema release netted Marcus a profit of £10,000 for half a year’s work whereas by contrast his deal with the BBC netted him £50,000.

Ordinarily, the sales agent (7&7) would have taken a 20% cut but it had been agreed that Marcus would keep the full figure to recoup money he’d spent promoting the film in Cannes.

The BBC deal is for five screenings over the next five years, starting in autumn of this year. The deal stipulates that during the first two years, the BBC have the exclusive “UK Free TV’ rights, meaning that the film will be removed from the UK edition of Netflix until autumn 2017. Clauses such as this are fairly standard and explains why Netflix has different inventories between territories.

UK Film Tax Credit

The biggest cheque Marcus received was from the UK taxman, in the form of his rebate for the UK film tax credit. If your film is certified as officially British then the tax credit will give you 20% cash back on the money you spent in the UK on certain costs. The eligible costs are confined to activities within pre-production, production and post-production; meaning that all the money Marcus spent on distribution, exhibition and marketing are not included in the calculation.

In the case of Papadopoulos & Sons, the UK film tax credit came to £156,000, or 19.1% of their overall production budget.

German income

In Germany the film opened on 70 screens, showing to 23,850 people and grossing €141,000 (£120,000) in its first week alone. After a month, the film had grossed €223,240 (£159,770) according to InterPlan, and Box Office Mojo has the final German box office gross at $289,670 (£197,000). The company with the German rights also released the film in Austria and so all told the gross was £215,929.

In return for the German and Austrian rights, Marcus had agreed an advance payment of €20,000 known as a Minimum Guarantee (an “MG”), which translated into a payment of £15,594. From the £216,000 box office gross, the distributor was permitted to recoup their costs, the money they spent on advertising and this MG. This meant that Marcus received no further payments for the theatrical or DVD releases in Germany and Austria.

However, the German distributor did negotiate a TV deal in France and Germany, which netted Marcus an additional £36,072.

Due to the lucrative TV deal, the MG has been repaid meaning that Marcus will receive 50% of the net income of DVD sales in Germany and Austria.

Greek income

Considering the film’s plot, Marcus’ background and the press surrounding the EU screening, the territory of Greece was always going to be a big one for Papadopoulos & Sons. As with Germany, Marcus agreed an MG, in this case of €15,000. This translated to a net income of £12,753.

And there the Greek information trail stops. Neither Marcus nor I can find any Greek box office figures, DVD sales or how it performed in TV. It is fairly common in the film industry for distributors not to provide additional information and filmmakers are pretty much powerless in preventing it. The MG is often regarded as the only money the filmmakers will see from the deal and so distributors don’t see the need to provide them with updates on the film’s progress. When I asked Marcus what he felt the gross Greek figures were he said “Who knows… I am going to say £50k because I know its been on Greek TV and DVDs have been sold, etc”.

Update: I been tipped off that there are admission figures on Lumiere, although not financial figures. Apparently the film was seen by 2,676 people in Greece in 2012 and a further 2,906 in 2013.

Video on Demand income

Most filmmakers are hoping that Video on Demand (VOD) income will grow to replace the lost income from falling DVD sales. Papadopoulos and Sons is available on a number of VOD platforms including…

*These misc payments come via the same aggregator as most of the other payments (The Movie Partnership) but the bank statements don’t reveal which VOD platforms the amounts belong to. Marcus believes that iTunes sales account for around 80% of the ‘transactional VOD’ revenue (i.e. not including Netflix, which offers ‘subscription VOD’).

The Netflix deal is for the UK and America and the gross is around £15,000 per year for a two year deal. The sales agent takes 15% and the aggregator takes a further 15%, leaving Marcus with 70% of the gross.

The film has performed well on the platform, with an average rating of 3.6 stars from nearly 120,000 ratings. Marcus says that Netflix have indicated they want the film when they roll out to new territories across the world. This is pretty impressive for an independent feature film.

Other Income

The film picked up other money from a few places…

£9,374 DVD sales in the UK, Australia and New Zealand plus an Amazon-only deal in America. The Australian deal was for two years and they paid a £1,000 MG upfront.

£1,131 American theatrical screening via ’theatrical on demand’ company Gathr

£ 275 Speaking fees related to UK film industry events

Totalling the income

It’s certainly possible that the film will recoup more money in the coming years so these figures are true up to 15th April 2015.

£158,000 UK tax credit

£ 88,259 TV

£ 45,601 UK theatrical

£ 34,942 VOD

£ 32,667 Airline

£ 15,594 Germany theatrical

£ 12,753 Greece

£ 9,374 DVD

£ 1,131 US screening

£ 459 UK screening

£ 275 Speaking fees

£399,055 Total

Totalling the costs

If we add up all of the costs of making the film (£825,222) with the rough costs of the UK release (£35,000) then we can see that the film cost Marcus approximately £860,000.

With income to date of £399,055, this means that the film is currently at a loss of around £460,000.

Note: You can see the full budget and costs at the bottom of this article.

I know this loss sounds like a lot but consider Marcus’ reasons for making the film. He wanted to learn how independent feature films are made, make something for his kids to see and have a fun time in the process. Marcus spent his own hard-earned money and was well aware of the risks.

I asked Marcus how he feels about the current recoupment status. He said…

Think of this as a long-term investment. The capital is sunk up front. After a couple of years I am 40% recouped. The hope is that after 10 years I will be fully recouped. But because of the strength of Netflix and BBC it’s clear this film will have a long shelf life. In year 11, that means every penny that comes in will be PROFIT! Think about it. If in year 11, I am making £25k per year that is £25k per annum with NO COST. This is why catalogues of old films are so valuable. Because if you have 20 films like this, making £25k per annum with no costs… well, you can do the Maths.

You must not underestimate the long-term value of a movie once its sunk capital has been recouped. In the West End a musical will have to run for two years before it’s profitable. Most never get to the two year mark. With a movie, if you have a universal story that has a long shelf life, you can be collecting payments for 20 or 30 years.

So I would always argue that this is a long haul investment. If I took the same £1m and put it in a bank, you may find that after 20 years Papadopoulos has out performed on a return many times over.

This is the recoupment stage but it is also still selling – e.g the US DVD and possible impact of Netflix rolling out across multiple territories. You say, existing deals MAY continue to pay out. They WILL continue to pay out because I get paid quarterly and for DVD, VOD, Netflix etc. Not in advance. So many deals are not completed yet (e.g Netflix) so it’s not a MAY it is a WILL.

Future income

It’s likely that the film will recoup more money. There is a full American DVD release due in October (the previous US DVD deal was exclusively with amazon) and 7&7 are actively pursuing deals in new territories.

In addition, the existing deals may continue to pay out, certainly the Netflix deal seems to be going well and the film continues to sell via iTunes et al. The UK Netflix deal will be on a two year hiatus but if it continues to prove popular then it’s reasonable to assume that they will extend and widen the existing deal.

When the film begins its five year screening period with the BBC this autumn it could lead to TV deals in other territories. TV remains the most lucrative media format for the film and so a few more TV deals could produce £10,000’s more.

Lessons for independent feature film-makers

Whilst this may not look like a sustainable model for filmmakers to follow there are a number of valuable lessons we can learn from these numbers…

Self distribution is not easy. Marcus spent a huge amount of time and effort to secure the UK release, and then again to get the film in front of his target audience. There’s no doubt that a large amount of the success the film had in UK cinemas was down to his dedication, hard work and unwillingness to give up.

Who you know, helps. At a few different points along Marcus’ journey it proved vital for him to trade on relationships with the right people. Cineworld only agreed to having the film screened in their flagship Shaftesbury Avenue site because one of Marcus’ employee’s flatmates was the manager. That said, Marcus isn’t the son of a famous filmmaker and so all his connections had to be earned. Anyone who’s met him will attest to the fact that it doesn’t take long after first meeting Marcus to want to do him a favour.

The cost of deliverables adds up. Deliverables are the assets you pass over to a distributor after you sign a deal. These will include a copy of the film but also audio and image elements. For Marcus’ deals in Germany, Greece and on airlines the distributors agreed to reimburse him for the costs of creating these items. However, Marcus still had to pay up front and the total for just those three deals came to £10,558. Filmmakers should remember than they may need to cashflow costs like these after they have signed deals. Here are a few of the deliverable costs…

£5,200 Full Feature 35mm Theatrical Prints

£1,000 35mm Feature Trailer Prints

£ 675 HD Cam SR Clone: Main film

£ 450 HD Cam SR Clone: The Making of ….

Soft money is vital for survival. Marcus took advantage of the UK film tax credit and it became his single largest income cheque at £158,000. However, as he paid for the film from his own funds he was not able to use any of the more tax efficient structures such as SEIS and EIS schemes. The SEIS scheme is for films of up to £150,000 (or the first £150k of a larger film) and it gives investors 50% of their investment back almost straight away. Then, if they fail to see any profits after three years they can claim a further 28% of their loss back from the taxman. The EIS scheme can support projects up £15 million and give investors slightly less back. If Papadopoulos & Sons had been funded by external private investors then they would have lost far less money than Marcus has to date.

The publicly available data can be wrong or incomplete. At the time of writing, the Box Office Mojo figure for the UK box office is $124,794 (£84,870 in 2013 pounds). Rentrak’s official figures suggest it was nearer £96,000 and yet using Marcus’ own bank accounts we can deduce that it was closer to £165,000. This is a common complaint I’ve heard from indie filmmakers as big commercial box office trackers are not designed to catch every penny given to every small film. They don’t cover all cinemas and it can be easy to miss the odd screening for non-studio films.

Research your marketplace. Data this candid is very hard to find but that’s not to say you can’t find some things out before you embark on the epic journey of making a feature film. Talk to other filmmakers (who over a few drink might be this candid!), attend film markets, look at what data is available online and approach sales professionals. Success if the film industry is not straightforward but neither is it random. And it only becomes clearer via experience and by accessing the experiences of others. (This point was a suggestion from Reddit).

Notes

The vast majority of data came directly from Marcus. I have cross-referenced as much as I can and it all seems to check out. In addition, Marcus didn’t just chat to me – he got his accountant to export all the transactions in the film bank account from the moment it was opened to date.

Other data came from Rentrak, the BFI, Box Office Mojo and interviews with Marcus (completed by myself and others printed online already).

Epilogue

I considered cutting this article into multiple parts but I think it serves its function best as one enormously long article.

I’ve known Marcus for a few years now and he has always been candid with this experiences and keen to speak to students of mine. I’m grateful that he was receptive to my idea of publishing the full data, warts and all. Few other filmmakers would be so open and so brave. Thank you, Marcus.

If you’ve enjoyed reading this and/or feel you have learned from Marcus’ experiences then for God’s sake buy a copy of the film. As you can see above, he would welcome the sales (plus it’s a fun film from a lovely chap).

Appendix

For those wanting more information about the film, here are a few useful data points…

The script

Rating

Full Production Budget

See below for the full budget of the independent feature film ‘Papadopoulos & Sons’. The only things which have been altered is removing names and combining the cast into one line item, due to requirements from agents.

Full income to 15th April 2015

See below for the income to date of the independent feature film ‘Papadopoulos & Sons’. The UK film tax credit (£158,000) is not included as it was paid into a different account. The items labeled “Deliverables” are repaying Marcus for money he has spent delivering the film to distributors. They were repaid without mark-up and so therefore are not strictly revenue (I did not include them in the income calculations earlier in the article).

Feedback on the film

Synopsis

Self-made businessman Harry Papadopoulos has got it all; a mansion house; awards and a super rich lifestyle. However, on the eve of a property deal of a lifetime, a financial crisis hits and the banks call in their huge loans. Harry and his family lose everything in an instant. Everything, except the dormant and forgotten Three Brothers Fish & Chip Shop half owned by Harry’s larger than life brother Spiros who’s been estranged from the family for years.

With no alternative, Harry and his family, plant enthusiast James; fashion victim Katie; nerdy Theo and their loyal nanny Mrs. Parrington, are forced to pack their bags, leave their millionaire lifestyle and join ‘Uncle Spiros’ to live above the neglected Three Brothers chippie. Together they set about bringing the chip shop back to life under the suspicious gaze of the their old rival, Hassan, from the neighbouring Turkish kebab shop whose son has his own eyes on Katie.

Each family member must come to terms with their new life in their own way and make the most of their reduced circumstances. Harry struggles with the banks to regain his lost business empire, but as the chip shop comes to life and old memories are stirred Harry and his family gradually discover that only when you lose everything are you free to discover it all.

This is a really useful article. It is rare for independent filmmakers to be so candid with the facts and figures especially as it was his own money. I had my own experience producing and directing a small Irish indie feature called “8.5 Hours” a few years ago. The article reminded my of all the hard work involved, especially in organising the cinema release. Well done to Marcus.

Thanks for this Stephen. An essential insight into the money side of indie film making and DIY distribution. It strikes me that many of the distribution costs are fixed, irrespective of the budget of the movie, which I found particularly useful.

True! For producers, directors and investors, it’s even worse in the US where most of the remaining revenue goes straight to the actors if they are members of SAG-AFTRA! Plus, the chances a real indie film gets released in 16 theaters, or even 1, is basically 0…

I’d go as far as to say that this is a ground-breaking article. Anyone getting ready to make their first film should read this and appreciate how rare a full and honest account of the process is.

We’re currently preparing to enter the distribution process for our film, Selective Listening, and trying to get stats and helpful advice from producers, sales agents, etc. before we started pre-production was like trying to access the Magic Chamber of Closely-Guarded Military Secrets… on Mars.

Thanks so much for this. Broadly speaking, my experience was very similar. I think he did very well to get the BBC deal and was very smart with his marketing. It was a charming film and surprisingly accomplished for a first time effort in this genre. I think he might be a little optimistic in terms of what he thinks the income will be in the future (for my sake I hope he isn’t). A word of warning to others though, this has been a very successful film by comparison with 95% of the films out there. So much of this business is about the management of expectation and you and he have done everyone an enormous service publishing this Many thanks. James Hacking (writer/director/producer/distributor Love’s Kitchen).

Great article and so candid. Thanks to Marcus and you! We just went through distribution on “Copenhagen” and it’s all about getting the word out which requires a lot of effort (if you don’t have huge amounts of money). The indie business is hard but if there is a plan and self-determination, it can work out!

I’m surprised American readers haven’t noticed that a few key costs are missing entirely from the budget; Writer, Director, etc. Story rights are all fine and good, however there’s still the matter of the guild minimums that haven’t been met in this case.

Well spotted. Marcus wrote and directed the film so he didn’t take a fee (it was all his own money so it wouldn’t have made sense).

The system in the UK is quite different to that of the US. There is little-to-no universally agreed rates for low budget film crew. There have previously been agreements between BECTU (crew union) and PACT (producer body) but the latest round of talks fell through two weeks ago (Screen International: “BECTU to set new UK production pay rates as Pact talks fail“). A few days after the talks failed, BETCU published their own rates. Even so, few low and micro budget films stick to them.

My understanding is that the rates paid on this film are on the high side for a low budget UK feature film. I was told that they’re around 90% of the recommended TV rates, although I’ve not calculated that myself. Are there any UK crew members reading this who want to comment on the amounts paid by Marcus compared with the going rate?

No matter what the industry bodies agree or not, the national minimum wage applies to all people who are not freelance (i.e most of the below the line crew).

Funnily enough, I’m hosting a panel for BECTU next month all about pay rates on low and micro budget films.

I’ve been looking for this information for some time, well done for such dogged detective work, ann for Marcus for sharing so openly. I agree with Tim – ground breaking – although why that should be so I have no idea.

Like so many indie films this was set up to fail. And will never recoup in spite of film makers still hopeful thoughts. Congrats for squeezing as much as he did out of it, due to unnecessarily hard work on the back end selling. Had he done his business financial homework on the front end the result vwould have been different. Money in films, like real estate, is made when you buy. Only with films that means setting it up properly, genre, talent, budget. It is apparent from this story he knew nothing about any one of the three or how they properly interact. That same money could have been spent properly and he would have made money. And so it happens over and over in the beginner indie world. And when it is all over there is no sign of any useful learning indicated in the occasional story that leaks out, like this one.

Thanks for your thoughts, Bob. I think you raise some good points about researching your marketplace before committing money. I want to share as many stories such as Marcus’ so that first-timers can be more informed and take appropriate action.

You only have to look at the published returns of the UKFC invested films to know that statement Bob is not true I am afraid. The UKFC had some of the very best people working in Britain selecting films, films that had all of the above and still some of them failed.

Even with stars, top sales and distributors attached made by well try and tested talent the UKFC got it wrong from time to time. Even the Hollywood studios fail. If it was as easy as you say then Waitrose and British Gas would be making films.

Hats off to Marcus for allowing all this data to be made public. As the UK distributor, of only British & Irish productions, I am restricted by confidentiality clauses with filmmakers, financiers, broadcasters etc so have never be able to be as honest as I would like.

I have to say he did very well indeed. Most British films do not I am afraid. I have some horror stories.

Marcus did know his market and knew how to find it which is extremely important.

Remember that very few British broadcaster ever buy British independent films. In France broadcasters there must license every French film that plays in French cinemas.

British TV could do so much more to help. I remember a time when they would license a British film for £250,000 for just two showings. Sadly those days are long gone.

The film may not be groundbreaking or even tops in its genre but the article is. Yeah, he could’ve handled prep and production more efficiently but that misses the point: revelation of the closely guarded numbers and how transactions are carried out in the business side of filmmaking is vitally important stuff for serious filmmakers to know and not at all easy to come by—whether or not you have all the “right” elements in your movie. Will be following this blog from now on. Thanks for sharing this story!

John, I never set out to be groundbreaking or top my genre. But I did touch hearts and told an honest story well. Prep and production was handled very efficiently. The shooting script was finished in March 2011. We were scouting locations in April. Casting in May. June and July were pre production. Shooting in August. Most industry people thought I’d made it for 2 or 3 million, but that’s because we put all the money on the screen and we were efficient!

Bravo! Question: did anyone suggest or offer bank financing since you were capitalizing your own cost? Doing so would have cut your capital outlay to maybe 30% of the budget. This is for both you and Stephen since this blog shared something normally not shared….I will also in a big way: from an accounting standpoint; what did you ‘project’ the film to make? This is very important and relates to a followup question; has anyone discussed with you what ‘Unamortized’ cost is’? Every dollar you have recouped should be multiplied by a preset factor….let’s say 10. So if it cost you $900k to make the film….you project it would make $9M….from an accounting standpoint….and this is where misunderstandings exist about 2 sets of books and funny accounting from a participatory standpoint….whenever ‘you’ decide to ‘write the film off’….every dollar you did not earn, basically becomes a ‘loss’ that you can use to write against any ‘profit; from any source until its gone. Let’s assume you get to $500k in all-in receipts….if you projected to film would make $9M….you can retain $8.5M in unamortized cost(losses) to offset any income ..I’m not sure what UK tax law is, but in the US….you have to use your unamortized cost within 10yrs. To be clear, you can use it all at once…or whatever amount ….meaning unless you owe more than this amount, you get money back. You guys are very welcome

Hi, Wow. That was one of the best articles on film finance I have ever read. Maybe the best. Thank you to both of you for this incredible work. Meanwhile, to the Last Tycoon, can you point to some places to learn more about unamortized loss in the film industry. That’s an incredible concept and I would love to learn more about it!

This is one of the few articles as comprehensive as a book on the subject. Very well done. Have you considered compiling a list of soft-money programs globally? As noted, if he was aware(or someone working with him), he could have structured to production synthetically as investor funded by creating one or more LLC’s….food for thought for your students.

I left this as a response to a comment for Marcus….will do so here as well.

Question: did anyone suggest or offer bank financing since Marcus was capitalizing your own cost? Doing so would have cut his capital outlay to maybe 30% of the budget. Since this blog shared something normally not shared….I will also in a big way: from an accounting standpoint; what did you ‘project’ the film to make? This is very important and relates to a followup question; has anyone discussed with you what ‘Unamortized’ cost is’? Every dollar you have recouped should be multiplied by a preset factor….let’s say 10. So if it cost you $900k to make the film….you project it would make $9M….from an accounting standpoint….and this is where misunderstandings exist about 2 sets of books and funny accounting from a participatory standpoint….whenever ‘you’ decide to ‘write the film off’….every dollar you did not earn, basically becomes a ‘loss’ that you can use to write against any ‘profit; from any source until its gone. Let’s assume you get to $500k in all-in receipts….if you projected to film would make $9M….you can retain $8.5M in unamortized cost(losses) to offset any income ..I’m not sure what UK tax law is, but in the US….you have to use your unamortized cost within 10yrs. To be clear, you can use it all at once…or whatever amount ….meaning unless you owe more than this amount, you get money back. You guys are very welcome

Hi The Last Tycoon (I have this image of you as Anthony Quinn – The Greek Tycoon!)

I did not consider using bank financing. I would do in the future. What I did was create a loan from my brother and I’s company http://www.Dynamis.co.uk to Double M Films. It was a commercial loan that I envisaged I would pay back quickly because I believed I was making a £3m movie for £1m so even if I sold the movie for £1.5m or £2m we would be in profit.

My mentor was the legendary Elliott Kastner. I knew him in the last year of his life and we became great friends. I was helping Elliot set up an internet business and he was filling my head with wonderful Hollywood stories – one of which was how he famously made a movie called “Oxford Blues” for $1m and sold it for $17m. I think that was his greatest ever margin. He made over 50 films in this way.

And I guess, naively, I thought I would do something similar. The plan, as said, was to create a £3m for less than £1m and sell for around £2m. What I didn’t know was the market to purchase indie films had collapsed and was collapsing.

Once I realised that I was never going to make a straight sale, I had to find a plan B which was my self distribution story.

The truth is I am still paying back the loan from Double M Films to Dynamis. If I was to write down the Dynamis Loan and play with the losses at the Dynamis end, then the money to Double M would be treated as income and taxed. Therefore, it just makes sense to plough on and keep paying back the loan.

So I could write down the loan from Dynamis to Double M and get the 30% losses to play with but then at the Double M end the money would be treated as income and taxed accordingly.

And truly, I want to pay it back. Every penny. The one thing I really didn’t factor in was the time it might take.

What all the other commentators say here is correct. It’s really hard to make money. There are much easier ways to make money. But I never came into it to make money. I came into it to break even (and tell a great story along the way).

I do think it is getting even harder now because whilst there are even more audiences now for movies as a result of greater access to whole libraries of films – it sometimes feels there are less buyers willing to pay for them.

This is why I believe it is important that indie film makers make films with heart, soul, life experience. They need to offer wisdom or a way to live. The stories have to come from them. That doesn’t mean films cannot be commercial or entertaining. But I think a big mistake that many first time indie film makers make is to try and second guess what the market wants in order so that they can establish themselves as film makers. Forget it! There are some serious players out there that spend millions working out what the market wants! So don’t worry about the market. Make your film from the heart. This is something I stress in all the talks I do at film schools.

The truth is, I may never make another movie. If so, I die a happy man because if I only made one movie then Papadopoulos & Sons would be it.

Thanks for sharing these very detailed information. I had a very similar experience producing our first feature film (called ‘Jenseits’) in 2005 here in Austria. Our core team consisted of 5 guys (myself included) working in the key positions on the project. We could not afford to pay anyone. Our budget of EUR 50k just covered equipment, catering, transportation, expenses on locations, and some specialized work we could not do ourselves and did not find someone willing to do it for free. If we would have paid wages, our project would have been around the same costs like this one here. Our budget came out of 50% federal promotion and 50% own money of the core team. The biggest single cost was the music (orchestra & choirs recording), music mixing & mastering and audio post production. That took 40% of the budget. Because of our inexperience shooting took 80 days over a 1 year period on weekends. Lots of scenes never made it into the final cut. After editing and all the post production we finally finished the film after almost 2 years of hard work. We were so tired. Trying to get the film into cinemas was much harder than we thought and we too went the road of self distribution. It was exhausting and depressing. Back then in 2006 there was no DCP. 35mm prints were too expensive. We played from DVD on the cheap projectors used for ads in the cinemas. Because of their terrible quality we invested in a good projector and borrowed that to the biggest cinema playing our film. A Hollywood blockbuster gets released on the opening weekend in almost every cinema, while an indy just gets a few. So while the blockbuster gets 2-3 plays per day in 200 cinemas all over Austria, we just got 1 play per day in 7 cinemas. You can do the math how much money you possibly can make over a period of 14 days. After that we produced the DVD and a soundtrack CD and found a distributor in Vienna willing to support us. They supplied all of the big merchants in Austria and Amazon with our DVD. The only reason we got away with such a low budget was because we did all the work we could ourselves. That included production, planning, camera, lighting, audio recording, first AD, editing, post production, color correction and grading, DVD authoring, poster and DVD design. All in all we worked for 3 years until the DVD was out. And we never made our money back. But we learned a lot and ATM our director is in the middle of making his 5th feature film now. So this is why I really appreciate what Marcus has done and I know the ups and downs all too well. And as a small sign of support I bought Papadopoulos & Sons on iTunes today 🙂

Marcus, indeed I liked your film. Some people criticized it for its low pacing, but for me that was a good thing. I also liked the cinematography and the actors (some critics found their performance not so good) – although I watched it in German, so this might be a point for the German synchronization. My only problem is the story itself, which unfolds a little bit too little, somehow avoiding depth. But I know how hard it is to get this right.

Thanks for sharing, Stephen. I wish more people would know how the financial scenario of a very successful indiefilm is looking like. Just think of the ones which do not perform as well. Interesting point of view to see a film production as long term investment. Nether thought of this before. After all: I had a lot of fun in reading this in every detail. Thank you VERY much for working this out! Greetings from Barcelona

A GREAT read and thanks so much Marcus! I’m heading down the same path with my film this fall, working with Miracle Communications for a day & date release (DIY) in the UK (October 15′) then back to the US for a day & date release with a distributor helping on that one. Going to be working with Porter/Frith on PR also. ps I enjoyed your film Marcus.

Thanks to you and the filmmaker for sharing this insight. I see an incredibly low number allocated towards advertising in general. This seems to be the #1 area that hurts film makers chances as recouping their costs back. Hangover 2 cost $40M to make and Hollywood spent $40M to market. A 1:1 ratio! I truly believe that this would have made all the difference, in terms of monetizing his product. Imagine $425,000 going towards the film and the $425,000 going towards marketing…. what a difference that would have made to really find the “tipping point” of where your audience is and where to keep finding them. Having a go-to market strategy would only HELP you get an investor to invest in your film and probably help you ask for more. nobledigital.com/strategy

Not necessarily. You can’t just assume that the additional marketing that would have been possible by spending $425,000 would have helped by that much. It is one thing for a big budget, or even medium budget movie to spend the same on advertising. $40 million buys you lots of TV time which is where you will reach a lot of potential audience. But $425,000 isn’t buying much of anything..other than more of the same. But that kid of advertising is not going to bring in millions of dollars more. And quite possibly not even hundreds of thousands of dollars more. For example…when is the last time you REALLY looked at a Facebook ad? Now…would that change if it was shown 5 times as many times? Probably not. 5 times zero is still zero.

This a great post, thank you for being so open and congratulations to Marcus Markou. I agree with the above post from NobleDigitalOne, the proportion of the budget the advertising spend is low and other moneys could have been brought to the project had it been larger, but I have one other quibble, I can’t find any reference to producer, director or writer fees. I feel to get a true picture, the budget should include these even if deferred, and the income reflect their profit share so real income can be deduced. Also, although the distribution and audience approval is clearly positive (I haven’t seen the film…yet) I do wonder if an experience director of the genre, and there are many very good ones, would have produced a film more efficiently with even greater appeal. …but I guess there is no anwser to that.. I look forward to seeing it. Bob.

The long term profit theory does not apply to a movie that is not a major hit. Only classics stand the test of time. All other movies age fast and past the 5th year of release will make little or no further sales. The sad fact is the following: Virtually every movie produced without a distributor will lose most of its investment (if not all of it). Distributors know it but won’t tell producers because they live on commissions and need product. One could argue that first and last time producers are the backbone of the film industry. They are the ones paying for industry’s deficit. To make matters worse, the entire economic model has collapsed since digital cinema and internet joined the show along with thousands of films schools. Now the amount of product has exploded and the distribution outlets are overwhelmed, driving prices further down. To make matters worse, the consumers download pirated copies of anything. The filmaker is left with two choices: Retire of lose money. Most will lose money until they retire. The only ones making money are giant coorporations who can buy their way to success by pumping so much money into the promotion of their movies that the consumers will pay in the fear of missing a important event. Small movies have no chance.

What an extraordinary achievement; I am taken aback and totally in awe of Marcus’s efforts, skills and tenacity. I would help if I could, and if I could get involved, I would too. I take note of Marcus’s experience and seek to learn from this. Thanking all in this discussion too.

Excellent work Stephen (and Marcus!), this level of data and information is very informative, thanks for sharing and supporting fellow film makers! I did make a cup of tea at the start, but your blog was so engaging the tea has turned cold! After reading the Blog I do need something a little stronger… I have self funded and self distributed via Vimeo VOD a micro budget film “Oh, Whistle, and I’ll Come to You, My Lad” https://thomthomproductions.com/2016/10/20/video-on-demand/ . I would be happy to submit the details if anyone wanted to know the costings/profit margins etc. Keep up the good work!

Stephen – your articles are always superb and useful. Thank you. I have a follow-on question about this article. I suspect it goes to the confounding heart of Distribution.

As an indie film lover who lives in the US, far outside of LA, NY and London, I can’t easily get to film festivals or art house showings. Which means that a film I’d love to see — Pietro Marcello’s ‘Lost and Beautiful’ for instance — is unavailable to me without the random intersection of time and the gods. Isn’t there an easy pay-per-view platform that indie producers can distribute their films to after they’ve completed the festival circuit and their art house distribution has ended?

I don’t have a DVD player — music and film are really moving to digital delivery channels, aren’t they — so I opted to try and buy the film for streaming / download.

These were the results…

– iTunes = “This title is not available in US” – Netflix = Need to sign up. I already have an account, so I logged in but Papadopoulos & Sons” isn’t available. – GooglePlay = No option to buy/watch, only “Add to Wishlist” – blinkbox = “Sorry, but TalkTalk TV Store movies and TV shows are currently only available in the UK”

So I did a Roku search. “Papa.. & Sons” is not available on Roku yet. What’s an indie film lover in the boondocks to do? Other than move to NYC?

A fantastic article Stephen. Thanks for keeping it as one piece made it so much easier to follow and understand. Congratulations to Marcus and thank you, thank you, thank you for sharing so much data. Keep going. I’m still inspired to continue producing indie films. Kenneth WOTR Ltd

Brilliant article, Stephen, truly. Kudos to Marcus for standing naked before the world. Plus the comments by all, particularly by Last Tycoon. I saw this film a couple of years back and loved it. I didn’t know the history of its journey till today, but now I am in awe at the hard work and the resultant creation. Well done to all involved, something everyone can be proud of. KenB

HE seems awfully sure of himself that it will recover the investment..as if $25,000 in year 11 is worth the same as $25,000 spent on making the movie in year 0. And he seems to assume that his movie will be one of the EXTREMELY RARE movies that buck the norm of movies making far less every year. He isn’t going to get the same TV deals in 2025 than he got in 2015. Not even close. Most will not want it at all, and ones that do will pay far less than they did in 2015.

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[…] Grab a cup of tea – this is a long one. It’s rare for filmmakers to get a candid look at the books of someone else’s film but, thanks to the generosity of Marcus Markou, that’s exactly what you'll … […]

[…] The full cost & income of a £1M indie film: if you’re looking to put together a budget proposal for your feature but not quite sure where to start, how the process goes, or how the money is spent, you’re in luck – Stephen Follows examines the roughly £1M budget for Papadopoulos & Sons, self-funded by producer/director Marcus Markou. It is a long one, but well worth your time if you are interested in learning about budgeting and self-distribution. […]

[…] Stephen Follows: Grab a cup of tea – this is a long one. It’s rare for filmmakers to get a candid look at the books of someone else’s film but, thanks to the generosity of Marcus Markou, that’s exactly what you'll get to read below. […]

[…] a few sound related stats e.g. the average size of sound departments and also the proportion of a £1 million film budget which is allocated for sound (£16,882 in this particular case). Clearly there’s nothing like […]